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Planning & Strategic Management: Stephen P. Robbins Mary Coulter
Planning & Strategic Management: Stephen P. Robbins Mary Coulter
Planning &
Strategic
Management
Planning
A primary managerial activity that involves:
Defining the organization’s goals
Establishing an overall strategy for achieving those goals
Developing plans for organizational work activities
Formal planning
Specific goals covering a specific time period
Written and shared with organizational members
Purposes of Planning
Provides direction
Reduces uncertainty
Minimizes waste and redundancy
Sets the standards for controlling
Strategies
The decisions and actions that determine the long-run
performance of an organization.
Business Model
Is a strategic design for how a company intends to profit from
its strategies, work processes, and work activities.
Focuses on two things:
Whether customers will value what the company is providing.
Whether the company can make any money doing that.
Elements of Planning
Goals (also Objectives)
Desired outcomes for individuals, groups, or entire organizations
Provide direction and evaluation performance criteria
Plans
Documents that outline how goals are to be accomplished
Describe how resources are to be allocated and establish activity
schedules
Financial Goals
Are related to the expected internal financial performance of
the organization.
Strategic Goals
Are related to the performance of the firm relative to factors in
its external environment (e.g., competitors).
Stated Goals versus Real Goals
Broadly-worded official statements of the organization
(intended for public consumption) that may be irrelevant to its
real goals (what actually goes on in the organization).
Strategic Plans
Apply to the entire organization.
Establish the organization’s overall goals.
Seek to position the organization in terms of its environment.
Cover extended periods of time.
Operational Plans
Specify the details of how the overall goals are to be achieved.
Cover a short time period.
Long-Term Plans
Plans with time frames extending beyond three years
Short-Term Plans
Plans with time frames of one year or less
Specific Plans
Plans that are clearly defined and leave no room for
interpretation
Directional Plans
Flexible plans that set out general guidelines and provide
focus, yet allow discretion in implementation
Single-Use Plan
A one-time plan specifically designed to meet the need of a
unique situation.
Standing Plans
Ongoing plans that provide guidance for activities performed
repeatedly.
8–
21
Source: Based on F. David, Strategic Management, 11 ed. (Upper Saddle River, NJ: Prentice Hall, 2007), p.70.
Sources: “America’s Most Admired Companies,” Fortune, February 22, 2006, p. 65; “The 100 Best Companies
to Work For,” Fortune, January 11, 2006, p. 89; R. Alsop, “Ranking Corporate Reputations,” Wall Street
Journal, December 6, 2005, p. B1; and “The 100 Top Brands,” BusinessWeek, August 1, 2005, p. 90.
Corporate Strategies
Top management’s overall plan for the entire organization and
its strategic business units
Types of Corporate Strategies
Growth: expansion into new products and markets
Stability: maintenance of the status quo
Renewal: redirection of the firm into new markets
Growth Strategy
Seeking to increase the organization’s business by expansion
into new products and markets.
Types of Growth Strategies
Concentration
Vertical integration
Horizontal integration
Diversification
Concentration
Focusing on a primary line of business and increasing the
number of products offered or markets served.
Vertical Integration
Backward vertical integration: attempting to gain control of
inputs (become a self-supplier).
Forward vertical integration: attempting to gain control of
output through control of the distribution channel or provide
customer service activities (eliminating intermediaries).
Horizontal Integration
Combining operations with another competitor in the same
industry to increase competitive strengths and lower
competition among industry rivals.
Related Diversification
Expanding by combining with firms in different, but related
industries that are “strategic fits.”
Unrelated Diversification
Growing by combining with firms in unrelated industries
where higher financial returns are possible.
Stability Strategy
A strategy that seeks to maintain the status quo to deal with
the uncertainty of a dynamic environment, when the industry
is experiencing slow- or no-growth conditions, or if the owners
of the firm elect not to grow for personal reasons.
Renewal Strategies
Developing strategies to counter organization weaknesses that
are leading to performance declines.
Retrenchment: focusing of eliminating non-critical weaknesses
and restoring strengths to overcome current performance
problems.
Turnaround: addressing critical long-term performance
problems through the use of strong cost elimination measures and
large-scale organizational restructuring solutions.
Competitive Advantage
An organization’s distinctive competitive edge.
Quality as a Competitive Advantage
Differentiates the firm from its competitors.
Can create a sustainable competitive advantage.
Represents the company’s focus on quality management to
achieve continuous improvement and meet customers’ demand
for quality.
Strategic Flexibility
New Directions in Organizational Strategies
e-business
customer service
innovation
Source: Based on K. Shimizu and M. A. Hitt, “Strategic Flexibility: Organizational Preparedness to Reverse
Ineffective Strategic Decisions,” Academy of Management Executive, November 2004, pp. 44–59.
Cost Leadership
On-line activities: bidding, order processing, inventory
control, recruitment and hiring
Differentiation
Internet-based knowledge systems, on-line ordering and
customer support
Focus
Chat rooms and discussion boards, targeted web sites
Possible Events
Radical breakthroughs in products.
Application of existing technology to new uses.
Strategic Decisions about Innovation
Basic research
Product development
Process innovation
First Mover
An organization that brings a product innovation to market or
use a new process innovations